Nonprofits Nonplussed Print E-mail
San Diego Reader

coin-collecting-numismatics-3(San Diego Reader December 30, 2009)

At the Bayside Community Center in Linda Vista, things are humming along as they have since the center was founded in 1932 as a settlement house for families of Italian and Portuguese fishermen. Having moved up the hill from Little Italy, Bayside still programs activities for kids, teens, seniors, people with disabilities, and new immigrants. Bayside’s service community is San Diego’s most diverse: Hmong, Hispanics, Somalis, African-Americans, Mixtec Indians, and whites populate the hill, many living in World War II–era housing projects. The center’s main role is helping recent arrivals who are socially and geographically marginalized.

If you visit the refurbished two-story building during the week, you’ll hear the ukulele club strumming Hawaiian tunes or see an old Anglo woman having lunch with an Afghani refugee. Downstairs, you’ll find the sewing class, overseen by a volunteer teacher, who instructs people from a dozen language backgrounds. (Which language does she communicate in? “The language of sewing.”) Saturdays, you’ll find the building overrun with 160 American kids whose Vietnamese parents teach them their language and culture. Sundays, you can’t miss the multicultural Christian group, praising God or painting the building.

Bayside’s vibrancy is only half the story. The large paid and volunteer staff, led by sociologist-turned-director Jorge Riquelme, is facing tough times. While other San Diego social-service nonprofits have closed or stopped programs, Bayside’s staff has taken the brunt of the downturn.

Bayside still receives 70 percent of its $1 million annual budget from traditional sources — federal, county, and city funds, the First Five Commission, and some 2008 stimulus money. These sources are not automatic. Riquelme, at the helm for three years, says that the downturn began in 2004, when money from a San Diego block grant program dried up. His predecessor scrambled, made cuts, quit. Riquelme was hired and put the center on Jenny Craig. To control deficit spending, Riquelme had to deplete the center’s reserves.

The genial Riquelme describes the effect of wielding the hatchet. “I’m 60 pounds overweight, worried, and I don’t sleep much.” The downsizing is “an incredible pressure, the executive director position, very lonely.” For fiscal 2009, he cut payroll by 30 percent and took a pay cut of 20 percent himself, dropping $14K from his 2007–2008 salary of $70,916. For part of 2009, staff members took furloughs. Ten full-time positions are secure, but ten others have been sliced up. Staff have lost jobs, been reassigned, or gone part-time. One works at the same job for no salary, in hopes that a new grant will come through. Another works just to keep her health care. Volunteers take over paid positions. Riquelme’s turned off the air-conditioner, asked his vendors to spread out payments, and begun bartering — exchanging services for payment due. Throughout, he’s cut no programs or services to the community.

Like the staff, Linda Vistans are pitching in. Riquelme asks seniors to kick in a buck for the free-lunch program. A printer donates a drug-awareness brochure. A dance band plays a fundraiser to pay for a senior field trip. A computer instructor, his community-college class canceled, teaches the course for free at Bayside. And as for Linda Vista’s gang problem? Riquelme says, “We get gang members dropping off their kids or picking up Grandma, so they look after us.”

Riquelme’s employees are month-to-month. No job is safe, despite seniority. Rose Ceballos, at Bayside for 33 years, is now associate deputy director. Most of her work has been full-time and paid, but “nothing’s guaranteed,” she says. “There’s always a little 30-day notice that says they can cut it off. That’s just the way it is. I oversee three different programs. I make sure reports are done on time. I supervise.” On furlough for three months in 2009, she hemmed and hawed about coming in on her unpaid days and finally said no, and of course, things backed up.

She changes the subject to others who “couldn’t afford to stay with a 50 percent pay cut.” It’s difficult because “your heart is in what you do.” Is the two-thirds-paid health-care benefit an incentive to stay, even with fewer hours? “I wouldn’t call it an incentive,” she says. “It’s decent. I’m paying quite a bit because I’m older.” Still, she works in nonprofit, fat years and lean, because of her “passion and not because I’m making big bucks.”

Hardest Hit Are the People We Serve

The current story of San Diego nonprofits is the story of a select few of the 11,000 groups in our community, all of which are doing less with less. None of the social-service agencies is immune from the recessionary flu. One of the largest is SAY San Diego, Social Advocates for Youth. The 38-year-old organization is run by executive director Michael Carr, who with Ellen Yaffa, director of development, sat down with me. In a lavender shirt and black-and-yellow tie, Carr says that his clergy background brought him into social work in the ’60s; he’s been with SAY for 32 years, 30 years as director. The organization was started by law students in the 1960s who advocated for youth (and families) who’d been swallowed up by the juvenile justice system. No kid should be thrown away; that was the philosophy. It still applies. Carr and Yaffa and a staff of 500, half dispersed throughout the city in after-school programs, plus 140 ongoing volunteers, help parents who want to help their children succeed in school.

SAY is and is not a government program, a private nonprofit that gets the majority of its annual $18 million budget from the county, with whom it contracts to provide services. One reason the county contracts for “delinquency prevention” is that locking up kids — those skipping school, taking drugs, joining gangs — is expensive and behaviorally ineffective. Carr says that traditional intervention “had the opposite effect [of what] we wanted: It made them more criminal, not less.” Schools aren’t equipped to deal with delinquency. Agencies can. But only in concert with a society-wide plan that addresses root causes.

If you meet someone who claims there’s a single cause for delinquency, says Carr, “You’ve just met a fool.” Poverty, level of education, child abuse, domestic violence — to address root causes, you need input from parents, schools, after-school programs, from county-government funds and leaders, juvenile court, probation officers, police, and from groups like his, an independent social-service nonprofit.

SAY competes with other groups for social-service contracts, but it is not in competition with the county itself. Funders require stiff evaluations; the paperwork to receive a grant is as massive as the paperwork to show how the grant’s been used. SAY’s administrative expense runs about 10 percent of the budget.

Still, Carr’s programs and services — in good years they’re renewed because of their success — has been hit hard of late. SAY’s 500 employees are paid professionals who are, in most cases, licensed or certified and hired by SAY. Money from federal, state, and county coffers, as well as from private foundations, memberships, and donations, is running 30 percent less than normal.

What nags both Carr and Yaffa is the overlapping nature of contracts: SAY may receive a one-year contract for a child-abuse program, spend $100K the first month, show results, and submit a claim, then wait another month to get paid, which means running a $200K deficit. “That’s what reserves are for,” says Carr. But in a downtime, reserves are gone.

“And while the recession is unfolding for us,” he says, “there are families who were living in a two-bedroom apartment that now live in a car.” They run out of food, lose jobs, double up in apartments, lose privacy. Clients call in crying, bark at receptionists at SAY’s Kearny Mesa headquarters, and are helpless to stop their kids’ changing behaviors at school. Yaffa knows of one child who was “suddenly flunking PE because his parents had no money for detergent to clean his gym clothes. He doesn’t tell the school; he just skips PE.” She’s heard of an increase in bed-wetting in five-year-olds with emotional issues.

SAY can barely keep up, says Carr. “If Dad loses his job, the home destabilizes, and you don’t know where that’s going to surface.”

As for SAY’s relative health: “I assume it will fall to pieces the minute I wake in the morning.” Several administrative jobs, because the program’s funding dried up, couldn’t be reassigned. Staffers “didn’t have transferable skills.” Consequently, he says, “Everyone’s nervous.”

In a heartfelt letter from Carr and board chief Jeffrey McCulloch, they wonder what happened to the programs offered. Many are threatened: First Five, juvenile justice, child abuse (two county contracts are slated to be cut by 40 and 33 percent), Healthy Start, the State SB303 Latchkey — these survived fiscal year 2008–’09. But “cuts this fiscal year seem almost certain.” The hardest hit will be “the people we serve.”

What’s more, “Many small nonprofits that are currently hanging on a shoestring may not survive.” Carr and McCulloch have prioritized reductions: first training, then merit increases, bonuses, some consulting contracts, vacant positions, annual cost-of-living increases, and, last, staff positions.

Please Don’t Take My Cane Away

While nonprofits are wilting, families, typically divorced women and their children, are adjusting to public-assistance cuts. Hit hard is child care for low-income families. The state’s latchkey program, extended day care for children before and after school, began in the mid-1980s and has been funded for more than two decades. This year Governor Schwarzenegger cut the program, meaning 13,000 children will lose care. Since July 2009, nonprofits like SAY have been scrambling to fund programs for these kids.

Mrs. Gonzalez, a current SAY client, is raising three grandchildren, aged 3, 6, and 8, on a housekeeper’s salary. Her son and daughter-in-law have been arrested for drug possession, their kids placed with Mrs. Gonzalez. Divorced, and with limited English, she is a proud woman. We meet at Chollas elementary school in late afternoon. Her girls play in an adjoining room. Mrs. Gonzalez doesn’t want welfare. “I don’t apply for help, because I think I can work. I like my job.” She refuses to take food stamps. The irony is not lost: if she did not work, she would qualify for more benefits. She works 40 hours a week at a retirement home and makes $7 an hour. Two of the children are in school, while the youngest is watched by a family friend.

When we speak in September, the grandkids have only after-school care. She is “losing time” because she drops them off at 9:00 and can’t get to work until 10:00, a 25 percent loss in wages. Her employer wants to be flexible, but it’s company policy. She’s had six tardies. One more and she’s fired. “I’m very worried for that,” she says. Paying for private child care is out of the question. The cost, at $160 a week per child, is more than half her income.

One day-care staffer at Chollas tells me that a few parents will deposit their kids on the grounds before school opens. The kids sit on benches, sometimes for two and a half hours. “It’s killing those parents. They have no alternative.” But Mrs. Gonzalez will not leave her kids by themselves.

Sandy Johnson, who is the director of SAY’s extended-day services, some 47 programs, tells me that 70 families applied last September for extended day care: 25 were approved, 25 denied, 20 are pending. The extended-care program at Chollas has only 6 families enrolled, the most SAY could pay for, but Johnson says she can’t keep a program open with six children. It won’t pay the wages of staff. It has to be fully or mostly funded.

Another woman helped by SAY, through the Family Self-Sufficiency program, is Bexaida. The divorced 42-year-old has four children, all in public school. Things got bad for Bexaida the summer of 2008. She was working, taking care of her kids and her elderly, diabetic mother, who is disabled and a breast-cancer survivor. Bexaida, whose long jet-black hair drapes her shoulders like a cloak, was behind on phone, cable, and utility bills. Cable is essential, she says. “Most children have to have internet to complete assignments.” Electricity shut off, Bexaida went to SAY. There, with the additional aid of Campesinos Unidos, another social-service agency, she filled out a stack of paperwork for emergency relief. Verification took months before her in-home essentials were reinstated.

She characterizes her mental and emotional state on public assistance as unstable. “I don’t wish this on anybody. I’m an educated person. But it seems that when a person is under so much stress, you lose focus with what you have to do and how you have to get there.” The stress overwhelmed her, and she could barely function. Bexaida worked for nine years for the San Diego Housing Commission, making $22 an hour, then, in 2004, was laid off. She had nothing saved. The bills mounted. Her marriage dissolved. Over time, she has found work, at $8 an hour. “Trying to adjust to three times less money is a drastic change. I’m very resourceful. But I couldn’t, for the life of me, think of how to do it.”

It was a drastic change for the kids too. What have they lost? “Vacations, holidays, birthdays, school needs, extracurricular activities.” This fall, Bexaida received backpacks of school supplies from SAY. “School used to be for free.” In addition, her eldest daughter, studying for college, “somehow got it in her mind that if she didn’t eat, she wouldn’t be a burden.” She became anorexic and was hospitalized. She’s come out of it, though the problem persists. It makes Bexaida sad to think of her kids not asking for things they want “because they know they can’t have them. We’re closer now. But, in another way, we’re not, because everybody [in the family] isolates themselves to deal with their emotions so it doesn’t affect others.”

Bexaida currently works three part-time jobs: at a deli, an evening job, and as her mother’s nurse. “I do her insulin, her test strip, and her monitor.” Some days she’s gone 7:30 a.m.–7:00 p.m. Her youngest daughter is in after-school care, while the other children are in the “six to six” program. They also watch each other until Mom gets home. Without the internet, her kids wait in line at the library for computer time. Bexaida is still behind on credit card and car payments. She wants to go back to school but can’t until she can qualify for loans. Recently, the deli cut her back from four hours to two every day. Business has slowed.

Bexaida, who is covered by Medi-Cal, tells me that she has a tumor. She’s waited 11 months for approval for treatment. Programs to help poor people pay for medications and transportation to appointments have been cut. Moving into subsidized housing in San Diego would help, but the waiting list is 15 years.

SAY, a clearinghouse for other nonprofits, has helped Bexaida with financial education, a credit report, and computer literacy. In 2008, for Thanksgiving and Christmas, she and her kids received food and presents from SAY. She and her children’s lives have been saved by the modest amount SAY has given. Realizing there’s a time limit for such help, Bexaida says, “I’m out of the wheelchair, I let go of the walker, and I’m still walking with the cane. Please don’t take my cane away.”

An Overview of San Diego Nonprofits

When I ask Doug Perkins, executive director of the San Diego Association of Nonprofits, why a person would start a nonprofit, the affable former businessman says, “It’s as much a decision of the heart as it is of the mind.” People have “a vision or a dream of doing good. It’s a different motivation than the for-profit world.”

Perkins warns those taking the plunge that their piggy banks better be full. “It will take a year or two to make any kind of money that sustains a director, an office, let alone a staff. Be prepared to continue your volunteer life. Hang on to your ‘other’ day job. You can’t open the door one day and expect all this money to flow in.” The uninitiated should stay focused on their heart’s calling — be it counseling, or staging cultural events, or helping stranded animals. “You’re motivated to serve.” Pleas to donors should never overshadow service.

A San Diegan since 1978, Perkins has held his job for two years. (He takes home $45K of the roughly $60K in membership fees and employs one assistant.) The organization began in the late 1990s when a group of social-service nonprofits began to network ideas and contacts. Membership-based and virtual, offers conferences and workshops. Perkins attends meetings, authors white papers, writes “capacity-building” grants, and helps start-up nonprofits name themselves and get donations flowing.

Part of the difficulty of navigating the San Diego nonprofit world is its size and variety. “An amorphous world,” Perkins calls it. Thousands of organizations, some housed in living rooms or church basements, make up the loose aggregate, including Little League baseball, the symphony, the San Diego County Breast-Feeding Coalition, the zoo, Ronald McDonald House, Surfrider Foundation, United Way, Alcoholics Anonymous, the Rod & Reel club, Friends of Chabad Lubavitch. At the Golden State Gay Rodeo Association of San Diego, five unpaid staff collected and spent $82,418 on rodeo expenses in 2007; during the same year, Scripps Research Institute, a medical nonprofit with assets of $524 million, paid its CEO Richard A. Lerner $995,240.

By common definition a nonprofit is organized not for commercial activities but seeks to raise money to serve its social, educational, artistic, religious, or environmental goals. Typically this includes a modest budget to pay directors, to have an office and a website, and to organize activities and tap volunteers for its cause.

Nonprofits are classified under the 501(c) provision of the Internal Revenue Service code. The code lists 26 types of nonprofit entities exempt from some or all federal income tax. (Most states allow similar tax-exempt status.) Contributions to nonprofit organizations are tax deductible. Nonprofits must file a yearly 990 tax form, a document that reports donations, expenses, salaries, and more. By far, the largest nonprofit pool is the 501(c)(3) organizations. These are described as “Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations.”

Nonprofits are often classed as one of three sectors: government, for-profit, and nonprofit. The University of San Diego’s Caster Family Center for Nonprofit Research regularly evaluates local nonprofits’ health and trends. Under the auspices of the college’s school of leadership and education sciences, the Caster Center has produced several studies in recent years that crunch key local nonprofit statistics. San Diego nonprofits are “vibrant and expanding,” with assets, as of 2007, totaling $15 billion. However, according to the center’s director, Laura Dietrick, “This number has decreased between 20–30 percent in the last year” as a result of a struggling economy.

One recent study found that nearly 80,000 people worked for a local nonprofit, about 6.2 percent of the county’s total employment. These groups spent about $7.70 on services for every $8.10 garnered, 95 percent efficiency. Only about 5 percent of what the nonprofits received came from county contracts.

Currently, there are 12,383 501(c)s in San Diego County and, within that, 9731 “public charities,” or 501(c)(3)s. Those 9731 nonprofits were broken into 12 categories. Four of the 12 account for 77 percent of “public charities”:

  • Public and Societal Benefit (which includes Foundations): 1698 at 19.4 percent;
  • Education: 1546 at 15.9 percent;
  • Religion: 1833 at 19.4 percent;
  • Human Services: 2175 at 22.4 percent.

Nonprofits are often called charitable organizations, though they may pay staff members big salaries to find donors (think Red Cross). Think tanks, chambers of commerce, and business leagues may be nonprofits but are not charities. Public charities, such as the American Cancer Society, are nonprofits; they receive money from a range of donors and the government and are engaged in philanthropic work. A nonprofit private foundation, usually organized around an individual or a family, gives money for the public good to groups, mostly nonprofits. They have a separate IRS designation. An example is the Bill and Melinda Gates Foundation. People who contribute to advocacy groups and political organizations, which may be nonprofit, will not receive a tax deduction for their gift.

Other eye-catching facts about local nonprofits from the Caster Family Center studies: Since 1999 the San Diego nonprofit sector has grown by 21.4 percent. The wealthiest nonprofits — our colleges, universities, and hospitals whose individual collection plates rake in more than $9 billion a year — represent about three percent of the sector but hold over one-third of the sector’s total assets. Most San Diego nonprofits are small: 67 percent file no 990 (ditto for nearly 90 percent of all religious groups, which are not required to file, although some do), while another 26 percent have annual expenditures under $250K. The majority of local nonprofits exist to provide services to people in need. A small percentage is funded with state and federal grants. The vast majority of gifts, at least in San Diego, come as direct contributions from you and me.

Working Just as Hard for Half the Pay

In Lakeside, where Hanson’s Aggregates mines river-bottom sand and golfers thwack balls o’er the Willowbrook Country Club, lies the upper reaches of the San Diego River. The ephemeral river is an upside-down waterway, its channel buried half the year in the groundwater basin, waiting to be pulled up by winter rain and join the surface flow. The unseen water is part of the Santee/El Monte alluvial aquifer, supplying drinking water to the county. The channel and its banks, prone to invasive species growth, as well as the water, are environmentally sensitive. The 52-mile river — the source is Julian, the mouth, the Pacific — is protected by two nonprofits: the San Diego River Park Foundation and Lakeside’s River Park Conservancy. A nonregulatory state agency, the San Diego River Conservancy, formed in 2002, also oversees the river’s preservation.

Fifteen years ago, neither nonprofit existed; no one clanged the bell for protecting the channel from encroachment by developers and polluters. That’s changed now that the two nonprofits have raised millions to preserve a water system along whose banks some 600,000 San Diegans live. Overseeing the Lakeside conservancy is Robin Rierdan, a fortysomething redhead, who, when we meet in her trailer office, is squishing Argentine sugar ants at her desk. She apologizes for the blitzkrieg; ants are bad, but it’s worse that these are “nonnative.” What moves this Santee/Lakeside lifelong resident? Local control of what’s local.

Rierdan and others began the conservancy in 2001, with no office and no money, only a vision and commitment. The project took off because of “the community’s and the elected officials’ interest — they wanted this.”

State water bonds were key. “[There is] a large habitat component, but the bones of the operation is the need to protect communities from flooding, to improve water quality.” State funds bought 100 acres for about $10.5 million, which gave the conservancy “our legs.” The entire San Diego River project is a greenbelt, where a system of trails and waterways “connects a diversity of parks, open spaces, public places, and community facilities.”

“I think our hills are beautiful,” Rierdan says — El Capitan, the valley floor, and the “riparian ribbon that the river brings.” She loves the people because they treasure Lakeside. “You have artists, cowboys, Harley riders, commuters, devoutly religious people. There’s no ‘keeping-up-with-the-Joneses’ here. Lakeside is eclectic.”

That dynamism fuels the conservancy. Lakesiders, Rierdan says, volunteer. “I have a church group of 50 people who are donating time this Sunday. Doing yeoman’s work.” Along the riverbank are hundreds of juvenile native plants that need to be hand-watered. “They’ll be bucket-watering, pouring water into little basins around every plant.”

Rierdan has raised $16 million, mostly in state grants, in the last eight years; another $5 million is coming — perhaps not soon enough. This year’s budget is $220K less than in previous years.

In December 2008, the state stopped sending money. At the time, she had $240K in outstanding invoices. By January, “I thought we’d be turning out the lights and moving the buildings offsite.” She received no state check for another eight months. Contractors who developed the walking trail and “shared the risk” with the conservancy were put on hold. She had already paid out from her coffers, “in anticipation of state reimbursement.” But the awaited day didn’t come.

With neither endowment nor reserves (luxuries for most small nonprofits), Rierdan had to scramble. The staff went from five full-time to one full-timer, a groundskeeper, and two half-time employees. One quit; another worked for free until she could get paid but is now on furlough. To keep the door open, Rierdan sent out emails, telling the world, “We are in trouble and we need your support.” By September, the conservancy had raised $40K via small donations. Even Rierdan has taken a hit: she works full-time at half-salary. For now, “The work still needs to be done.”

Rierdan suffers none of the “inertia burden” that ossifies bureaucracies. While loathsome, she can lay off people and ask them back as volunteers. She can be entrepreneurial, as when she rid the river of 400 cubic yards of fill and widened the flood plain, by getting Caltrans to take the mass away for Highway 52 in Santee. That saved $3 million. After kowtowing to regulations as a state worker and acceding to standards as a teacher, Rierdan prizes her nonprofit’s freedom. She can’t predict the budget or donations. “We have to be smarter than that,” she laughs, and squishes three more ants.

An autodidact, Rierdan submits grants to the Department of Water Resources, where competition is fierce. For $20 million in offerings, the state may receive $90 million in grant applications.

Long-term is the big worry. “I can’t tell you right now how I’m going to do it,” she says. “But I will figure it out — or someone will figure it out, because [the conservancy] is too important to let go. If the State of California does not fall off the cliff, we have budget money for the next three years.” By then, she hopes the river park’s amenities will generate fees from users to sustain the project. Volunteers can keep the habitat maintained. In the meantime, her nonprofit, like nearly all, “needs an angel.”

A Bit Better Downriver

Rierdan’s lower-river partner, the San Diego River Park Foundation, is run by Rob Hutsell, a fourth-generation San Diegan. In a small office along Pacific Highway, Hutsell tells me he’s always been a nature volunteer and spent many weekends cleaning up the river. But the catalyst for Hutsell was the big 2000 sewage spill, which devastated restoration work done on the river. While the state levied fines against the city, Hutsell and others held their first meeting at Skip Frye’s Surf Shop, with Donna Frye in attendance. A many-pronged approach, spearheaded by Christine Kehoe’s legislation, soon won the river state-protected status, funds to begin preservation, volunteers to do the cleanup, and a new life for Hutsell.

Living on savings and working from home, Hutsell took two years to build the foundation. What surprised him was that those who should be the river’s caretakers merely developed condo projects or shopping malls beside it, stealing its romance (River Run Estates) and doing little to preserve water, access, habitat. Hutsell says people have been dumping crap into the river for decades, The river land (beside and under) is most often privately owned. The water is in the public trust.

The San Diego Foundation and the California Coastal Commission each gave the foundation $25,000. Hutsell has beat the bushes for money, like Rierdan in Lakeside, securing state grants. Unlike Lakeside, San Diego has a wealthy donor base that Hutsell also taps. He goes to meetings and asks people to give teh organization riverside parcels. A few have. The main expense has been buying land. Of the foundation’s $1.3 million value, $830K is in land assets, some 626 acres, all of it “at the top of the river.”

Two years ago Hutsell had a “gut feeling” about the economy. “This can’t sustain itself.” He got a $250K grant from the local Parker Foundation, which almost single-handedly keeps the fiscal doors open. He reorganized the foundation, returned the mission to “we want a clean and healthy river,” and got better at marketing to givers and potential partners.

He’s weathering the downturn. Having 3400 volunteers helps. He also maintains 5.5 paying positions. Most begin as volunteers or interns. They come and they go. They don’t cost a lot. Like Hutsell, they’re passionate for the environment. Since there’s no upward mobility in his foundation, Hutsell encourages them to move on. But he’s careful with advice. “I wouldn’t want to be out the door right now, hoping I could find something else.”

Minimum Wage Is Where God Wanted Me

The religious nonprofit Youth for Christ is hanging on for dear life. The organization is bare bones: two small rooms; one has a copier, the other two desks that cradle laptops. The “palatial office,” as director Don Smith calls it, is part of the barracks-like Faith Chapel in Spring Valley. Smith inherited a $45K debt in January of 2008 when he took over the organization, and though he’s got it down to $27K, that’s about the only good news from this merciless year.

Smith, with no religious background, was saved — “I made the spiritual decision that I really need God in my life” — by the Campus Life group at Patrick Henry High School in 1969. He’s since devoted himself to youth ministry as organizer and assistant pastor. “If you cut me, I bleed Youth for Christ.” His group, part of a national organization, has established clubs in schools for decades; after-school meetings don’t violate church-and-state separation. They also build “Christ-centered programs” for teen moms or troubled kids in juvenile hall.

In his golf shirt, Smith is the Rick Warren man-of-God sort. He talks people and programs, rarely belief and brimstone. Some donations come from bequests, but most are $5 and $10 gifts given at rallies like “Breakaway,” picnics, and an annual golf tournament. In fiscal year 2008–2009, he raised $110K. Middle school clubs are Smith’s main target; every year he negotiates contracts with administrators to be on campus after class. Sometimes parents give money. Those whose kids have been “impacted by the organization go, ‘Wow, we like what you’re doing with our son or daughter.’ ”

But when September 2008 hit, Smith’s cause was decimated. In the first six months of fiscal year 2009, he says, “Donations are down $25K.” In terms of a budget, “We’re treading water, but we’re 17 percent below the surface.” He spends half his time phoning and blogging, the latter a new way to conjure money.

It’s always an uphill battle for a nonchurch religious nonprofit, Smith says. The first priority for Christians is to load the collection plate at church. “Wherever they are in their spiritual life, they stay consistent with that amount.” The next tier is to give to a “person with whom they have a relationship,” say, a missionary, a pastor with a program in Mexico, a televangelist. The third tier goes to organizations they believe in, like Youth for Christ. When times are bad, “The third tier gets cut first.”

How does he balance both his calling and phone calling?

“I went through a sad divorce,” he says. “I didn’t want it, but after [obtaining] two restraining orders, I filed for legal separation. She counter-filed for divorce. It’s to say to kids that ‘God can work in all areas of your life, and, by the way, I’m divorced.’ It wasn’t God’s fault; it was the choice of two individuals.”

Smith says that he loves kids, and his focus in the “para-church” is to reach out to “kids without a religious foundation.” First impressions are crucial. Recently, he met with a Youth for Christ donor of 30 years. The self-effacing Smith wanted help with being a better fundraiser. “People who know me know that I’m not an executive-type person. I’m great with kids but lousy at raising money. I asked, ‘What’s your advice?’ He said, ‘To be honest, Smitty, you’ve let yourself go. You gained too much weight. That has a negative projection on the people you meet with.’ I grumbled but needed to hear that.” Since then, he’s lost 22 pounds. “I needed to do it for my kids and for me.”

When the man saw Smith recently, he said, “ ‘Hey, you’re looking pretty good.’ ” Smith is hoping that “at some point a nice check comes in.” During the fall 2009 board meeting, it was determined that Youth for Christ had funds to operate until January 31. That’s the day they’ll reevaluate.

The Rich Don’t Feel Rich Anymore

In Cole Porter’s Great Depression–era farce Anything Goes, Billy Crocker, a failed Wall Street lackey — “a broken-down broker” — steals aboard an ocean liner, voyaging from New York to London, in hopes of stopping the marriage of an American heiress he’s in love with. Yes, he’s pure of heart, but he also needs to survive financially. Such a rearview reflection via love, song, and a blistering economy is not lost on Leon Natker, executive director of Lyric Opera San Diego. Natker, a Juilliard graduate, dramatic tenor, and head of Lyric Opera for 21 years, staged Porter’s classic this past fall. In fact, a season with four productions so far has been, he tells me from his office above the radiantly remade Birch North Park Theatre, “50 percent higher than last year but still not where it once was. That indicates how much of a disaster it was last year. It was a bloodbath.”

Natker is equal parts loquacity and pluck, a necessary balance for an opera impresario. When he took over the company, a “Gilbert and Sullivan” troupe, in 1989, it was failing. Both bad management and the savings-and-loan crisis choked off donor support. Lyric Opera’s budget was $96K in 1989. By 2007–2008 it was $1.95 million. Natker had no deficit, and the company expanded: out-of-town sets, color brochures, giver soirees. He took the subscriber base from 175 to more than 1000. Oh, happy day — in retrospect.

Then everything crashed. By August 2008, “There were almost no donations, and ticket sales were down to zip.” Natker had already planned to produce four operas and six concerts. Who quit giving? “People who’d been donating $5K or $10K a year called up and said, ‘I can’t give you anything.’ ‘I can only give you $500.’ ‘My portfolio is so bad off, I’ll have to wait a year.’ ” Several donors were all but wiped out. “Their retirement incomes of $8K–$10K a month dropped to $2K. What are they going to do, get a blue vest and say, ‘Welcome to Walmart’?” As of September 2009, “We haven’t had a donation of appreciated stock” — one tax-deductible way the portfolio-laden pony up — “in 18 months.”

Natker says “about 1000 people” spread their wealth around to the San Diego arts community. Grants from the city’s transient occupancy tax (TOT), for Lyric Opera, total only four percent of his annual budget. “Somewhere between 500–700 middle-class people give something every year.” Last year’s dark cloud had one silver lining. “The money went down, but the number of donations went up. People knew they had to send something to keep us going.”

For Natker, who as an artist has always lived on the edge of bankruptcy-retirement-indigence, the only way to increase donations is to keep his four-per-year production schedule alive. Lyric Opera makes 55–60 percent of its budget via ticket sales. His company is “the affordable, accessible alternative.” Top seat is $52. Unlike most grant-supported nonprofits, his tack is to keep building shows, spending his way into and out of the hole.

But for this season, he’s cut back. The previous staff of 19 full- and part-time employees is down to 12. Their salaries and medical benefits have been preserved, while Natker and his artistic director have taken 12 percent pay cuts. Natker sliced expenses for sets and costumes and recruited six new board members, whose Job One is fundraising. He negotiates with vendors to keep credit extended and bills semi-paid. The budget is down to $1.75 million, $200K less than last year’s.

In September 2008, the Lyric Opera led off with Candide, Natker laughs devilishly, “the week Lehman Brothers collapsed.” (Based on Voltaire’s novella, the story is, ironically, about the fall of a hyper-optimistic youth.) “In 2000 it was a sellout. Last year, not so much.” Ticket sales never rose above 70 percent of the house. Another irony: the season was a critical success, perhaps (I ask him to speculate) because freelance artists perform better when faced with imminent loss. “It brings out creativity,” the flip side of “stress and angst.”

Another source of income for Lyric Opera is to rent the North Park Theatre to other companies. Many canceled this year: La Jolla music summer festival; Malashock dance company; a Hawaiian production with a luau-themed Christmas show. More blows to the bottom line.

The financial hit on opera nationwide, Natker says, has been tremendous. Eight companies and two well-known summer music theaters in Florida and New Jersey went belly-up. In November 2008, Orange County’s venerable Opera Pacific closed before its season was barely rolling. Even the Metropolitan Opera mortgaged its Chagall murals, titanic paintings that adorn the Met’s grand foyer.

When the Dow Jones drops, people are “at home, in a fetal position, under the covers, eating chocolate ice cream.” Getting the nail-biting masses back to the theater is Natker’s goal.

A Public That’s Private

I asked nonprofit directors whether they saw themselves as public or private entities. Bayside’s Jorge Riquelme sculpted the distinction best: the American nonprofit organization is nongovernmental in name only. “We are paragovernmental agencies, if you look at the source of our funding.” Seventy percent of his budget at the Bayside Community Center is local and state. The problem is that too many organizations are “overly dependent on government.” Riquelme wants more independence: partnerships with local businesses, gifts from local foundations, people donating time.

In a less-hitched model, he says, “People are no longer clients,” to be served by social-service money with strings attached. Instead, he wants “the people [to be the] decision-makers. I want the beneficiaries of the community center to have a stake.” The community center will die if it becomes “a storefront for a government office. You have your private for-profit. You have your government-public. And you have a public that’s private — which is what we are.”

The beauty of the nonprofit, the verdict of every director, is independence. Bettie Reinhardt, longtime director of the San Diego chapter of the National Alliance on Mental Illness, agrees. Her group is organized by people who have mental illness or have mental illness in their families. The chapter, with a staff of 20 housed in a modest storefront in North Park, provides programs ranging from award banquets to housing subsidies to school presentations, all of it free. Their goal is to advocate for those they serve by busting the stigmas that surround the disease.

Reinhardt’s daughter has bipolar disorder. “Our viewpoint is,” she says, “that mental-health professionals are knowledgeable. We want them there. But they don’t have the lived experience we have. Nobody knows as we do what it is like to live with a mental illness or to be a family member. Nobody helps their peers better than those of us who’ve walked in their shoes. Our independence is extremely precious.”

Is Paradise Generous?

That depends on how you deconstruct the sector, says Pat Libby, director of the University of San Diego’s Institute for Nonprofit Education and Research. Having documented the local nonprofit scene for three years, Libby tells me by phone that our nonprofits are among the most poorly capitalized in the state. Local groups pay employees on average $3 less per hour than their counterparts receive in the rest of the state, $15.58–$18.67. San Diego foundations that give to local nonprofits have far fewer assets than their California betters. The state average for foundation assets is three times the size of San Diego’s. In San Francisco, whose foundations are among the most generously endowed in America, the asset average is almost 25 times higher!

Except for Joan and Irwin Jacobs who, among other gifts, ladled $100 million into the coffers of the nonprofit San Diego Symphony in 2002, San Diego has nothing to rival such family-built private foundations as the Ford, the Rockefeller, the Carnegie, the MacArthur — great enablers of the arts and sciences. The Joan Kroc fortune was disbursed at her death, and she left no foundation. What’s more, San Diego is composed of wealthy retirees who often pledge their money to those allegiance-pulling colleges and hometowns of their youth. San Diego has only two Fortune 500 companies now that Science Applications International Corporation is leaving, the semi-generous Qualcomm and Sempra Energy.

San Diegans do give. But it’s more often a coin-purse donation or a volunteer hour here and there. Aside from Father Joe, social-service assistance devolves to the state, via county contracts with nonprofits, which, in turn, care for the neediest. Libby’s research shows that the most populated areas of the county have the fewest nonprofits; some of the densest areas, where new immigrants and the military live, have virtually no nonprofits to help with neighborhood services. This trend will continue as more low-income people — San Diegans making less than $10K annually were up 40 percent between 2000 and 2004 — move into communities where they can barely afford housing and no agency exists to serve them. Those folks must take a local bus to an organization in the city or Mission Valley that will.

What’s worse than paradise’s lackluster performance is that the health of nonprofits will only worsen, if Libby’s most dire prediction comes true. She believes that by the time the recession is over, the number of nonprofits in the United States will be reduced by 75 percent, from one million to 250,000. Most dire indeed.